Some of The Disadvantages of Bankruptcy
1:16 AM
Many people will use bankruptcy as a debt repayment option without fully understanding all of the disadvantages of bankruptcy. While a lot of bankruptcy trustees claim bankruptcy provides you with a clean slate to start fresh, many people realize after-the-fact that filing for bankruptcy can actually push you into a deeper financial hole. After all, bankruptcy was created to be disadvantageous to all involved, not just the creditor. That means you really need to understand your financial situation before filing for Chapter 7.
As a leading disadvantage of bankruptcy, the fact that a discharge will not always clear all debt is one that is often overlooked by borrowers. That's right; in some cases, even after a trustee has liquidated your assets and repaid creditors, you could still owe others whose debt was exempt from the bankruptcy discharge.
Your property will be sold by the trustee. In some cases, your debts that couldn't be repaid after the distribution of assets will be discharged. Any inheritance that you get after filing for bankruptcy can also be considered property and can be used to repay creditors.
It is almost impossible to withdraw a chapter 7 filing. Once you file for bankruptcy, it is done and you are subjected to all the disadvantages. Your credit score takes a major hit. Bankruptcy will stay in your credit rating for the next seven years. Lenders usually do not entertain previously bankrupt borrowers. Thus, after bankruptcy, it can be difficult for you to get loans.
Debtors are able to file for Chapter 7 for nearly any amount of debt, however a minimum of six years must elapse before a debtor can file once again.
The procedure to file for bankruptcy also takes its toll on your health and mind. You will be constantly reminded of your conditions. It is a traumatic situation for most.
For many, the stress of bankruptcy leads to marital problems, including divorce. In some cases, this can deepen the financial strain of a discharged bankrupt, leaving them feeling even more defeated or beaten. Remember, six years must pass before the next bankruptcy filing. Relationship stress can cause problems with social circles and not surprisingly, bankruptcy also increases the likelihood of alcohol abuse. The feelings of loss are rather strong in those who have gone bankrupt.
Due to the mental trauma, it can become extremely difficult for you to manage normal family and social life. There can be serious differences between spouses. The persons will also find it difficult to get along with friends because of feelings of shame and guilt.
There are some advantages for persons in serious debts. However, for most people, they can get along without filing bankruptcy. There is a mandatory credit counseling three months prior to filing bankruptcy. This will help the persons find ways of managing their finances. File for chapter 7, only if you know as last resort. It is the option that makes better financial decision. If the advantages outweigh the disadvantages of bankruptcy, only then should you go for it.
As a leading disadvantage of bankruptcy, the fact that a discharge will not always clear all debt is one that is often overlooked by borrowers. That's right; in some cases, even after a trustee has liquidated your assets and repaid creditors, you could still owe others whose debt was exempt from the bankruptcy discharge.
Your property will be sold by the trustee. In some cases, your debts that couldn't be repaid after the distribution of assets will be discharged. Any inheritance that you get after filing for bankruptcy can also be considered property and can be used to repay creditors.
It is almost impossible to withdraw a chapter 7 filing. Once you file for bankruptcy, it is done and you are subjected to all the disadvantages. Your credit score takes a major hit. Bankruptcy will stay in your credit rating for the next seven years. Lenders usually do not entertain previously bankrupt borrowers. Thus, after bankruptcy, it can be difficult for you to get loans.
Debtors are able to file for Chapter 7 for nearly any amount of debt, however a minimum of six years must elapse before a debtor can file once again.
The procedure to file for bankruptcy also takes its toll on your health and mind. You will be constantly reminded of your conditions. It is a traumatic situation for most.
For many, the stress of bankruptcy leads to marital problems, including divorce. In some cases, this can deepen the financial strain of a discharged bankrupt, leaving them feeling even more defeated or beaten. Remember, six years must pass before the next bankruptcy filing. Relationship stress can cause problems with social circles and not surprisingly, bankruptcy also increases the likelihood of alcohol abuse. The feelings of loss are rather strong in those who have gone bankrupt.
Due to the mental trauma, it can become extremely difficult for you to manage normal family and social life. There can be serious differences between spouses. The persons will also find it difficult to get along with friends because of feelings of shame and guilt.
There are some advantages for persons in serious debts. However, for most people, they can get along without filing bankruptcy. There is a mandatory credit counseling three months prior to filing bankruptcy. This will help the persons find ways of managing their finances. File for chapter 7, only if you know as last resort. It is the option that makes better financial decision. If the advantages outweigh the disadvantages of bankruptcy, only then should you go for it.
About the Author:
Chris Blanchet is the author of Help Fix My Finances, an e-book about legitimately taking back control of your personal finances. He also maintains a debt-free blog, How To Repay Debt.com.
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